From downtown Milwaukee, welcome to Money talk with Bob. Each week, professional advisors from Land and company investments discuss the latest financial developments offering timely insight and long term perspective. This is money talk for 07/26/2024. Checking the calendar, the brewers are home this weekend with Florida Marlin, and the brave. Remember them. They're in town for 3 days.
And the sounds of Harley are everywhere for the homecoming from the factory to the lake front to the Brady Street Biker bash, keep an eye out for those riders. And we also have German fest underway at the Summer fifth grounds, which is just like the Harley homecoming, but with accordion. And if that's not noisy enough a Thunderbird here with the Aaron water show through the weekend. Today it's all animal stories all the time. Let's start with c cocaine fueled sharks off the coast of Brazil.
The media coverage of feeding frenzy ranges from shark eating bales of cocaine from smugglers with the men diminishing Jaws theme playing in the background. And then there are the news outlets that are looking for younger audience asking and using the annoying baby sharks on. If you hear the baby shark song enough times, you wanna be thrown into the ocean. A man from New Jersey, who was just trying to protect his daughter is facing animal cruelty charges.
Father and daughter were at the Jersey shore when a seagull swoop down and tried to steal the daughter's French fries. Dad wasn't having any of that. So he grabbed the colony and he captivated it. I don't think us... I don't like a stereotype people, but his name is Frankie and he is from Jersey. So this may not be his first capping. And finally, a leftover nugget from last week's convention. Grind the dating and hook up amp.
Crashed in Milwaukee because of unprecedented traffic during the Rn c. This reminds me of an old saying when the cats away the mice will play. Alright. And on the podcast today we have Steve Gil, Joel Dr, Kendall Bauer and raven up the week. Here's Kyle Tit. Well, thank Max, a bit of a mixed week overall for markets, Nasdaq down 2.1 percent. Been in a bit of a slump
recently. The S and P down 8 tenths of a percent, down 46 points this week, But a positive week again, overall for the dial up 7 tenths of a percent, 300 points after adding 654 on Friday. For the year, starting to close the gap a bit between Dow, S and P and Nasdaq, but still a pretty big divide than Nasdaq up 18.1 in the year, the S and p up 15.3, and the Dow still pretty pretty substantial positive 8 8 percent on the year all including dividends.
You know, I think maybe Steve, the place to start this week just some of the volatility we've seen in stocks recently. At 1 point in time, Nasdaq, almost 7, 7 and a half percent off recent peaks, and I think a good reminder of, why, you know, when we look at our portfolios, we can't just pick the best number we see and assume that's what things are supposed to be worth. Yeah. You know, kinda of, what a fantastic week to remind investors not to try to time the market.
We got Whips saw that week with the markets trading down earlier, snapping back by the end of the week, but still finishing a bit down on the Nasdaq, but but climbing back into the green for the dow. The point here is that have a strategy stick to your strategy, have a plan and and trust that allocation moving forward through
thick thin. If you react to the market, all you're gonna do is is make some irr rev irr changes that you're not gonna be able to undo because of a trade may be brought on by Fear agreed and to piggyback on that steve. I think, sometimes down days like we've seen this week or even last week. With the big swings down can be a bit deceiving. So for example, the S and p, you know, down, intra day a little over 1 and a half percent or 2 percent throughout the week.
But if you dive into the 500 companies within the S and p. There was a point in time, this past week where the vast majority of companies in the s and P were actually positive, the day that the P was still down. So some of the you know, big tech companies given, you know, some of the nice returns back, but at the same time, you know, some of the other parts of the S and P still rallying the same day.
So, you know, Kendall, there had been this expectation that when we saw broadening of participation in stock market returns when it wasn't just 07:10, whatever the number is, but certainly a lot less than the 500 names in the S and P that you'd see things calmed down a little bit and In some sense, we have, we haven't seen, you know, those 7 or 10 names up 30 percent in this stretch of, you know, a couple of months.
At the same time, we have seen a bit of a spike in the volatility index, kind of the expectation for where stocks are going forward. That doesn't mean downturn turns, it just means investors are thinking that maybe things get a little more rocky from here. They bump around a little more. But also, I think you start to see okay. There's more people interested in and what's the direction? What's happening with the economy? What's happening with earnings
in the middle of earning season? And of course, I think you rightfully point out if we were seeing a drastic shift in kind of the overall sentiment on earnings, you'd probably see the rest of those names negative like the the big 7, the big 10. And on the other hand, what we have seen is, hey, the earnings picture is mostly shaking out the way we thought. You know, I think the other big piece of news kendall we've transitioned to this week is this Fed pivot. And
for... It feels like ever now, but certainly for the last few quarters, we've been talking about wins the Fed coulda cut, what would it take. All of a sudden, the last month or so. Investors have really gotten on board with this idea that comes September, the Fed is finally gonna make that cut. We've got a Fed
meeting on tap next week. You'll hear from you know, some of the the the major players of the Federal Reserve, it's seeming more and more, like, potentially they have the cover they're gonna need. To make that first cut comp September. Yeah. And I think, you know, seen a few positive reports coming through this week in the past few weeks on an inflation front. Showing inflation, the rate of inflation coming back down. 2 years ago when we hit, you know, roughly, we hit that 9 percent number.
And now we've subsequently come back down right around 3, maybe a little bit, you know, below that. So get to a point where I think, you know, they're comfortable to to proceed with, you know, beginning that rate. Beginning to cut interest rates. The interesting part 2 is you look at the Gdp report that came out and not to jump ahead. We're certainly gonna cover that in a little bit. But you know, for a while, we were talking about how stronger economy
was almost a bad thing. Right? But we're seeing potentially a an environment where inflation has come down and yet Gdp still, you know, remains on track and and even surprising, I think pretty good number here this last quarter. Yeah. Jewel. Let's dive into that Gdp number because you know, I think a lot of mixed news we've been talking about economically. And when you look at gross domestic product, it's the 1 piece that tries to sum it all up. It's the 1 piece
that says okay. When you look at Aggregate, what's that activity look like and we got a reading on the second quarter here this week. And looking at it in aggregate like that, Kyle means that they're looking at a lot of different numbers, and that's why they they update this twice. The the report that came out this week was their first look at it and there's usually an adjustment between
those. It's also old data when you think about it, I mean, they're talking about, you know, what happened in the second quarter of this year and we're already, you know, 1 month into the the third quarter. But that said, I mean, like Kendall said, it was it was a strong report. It was 2.8 percent annual rate of growth, and that's twice what it was in the first quarter. That's that's a
pretty good clip. And, you know, you sent a a note out earlier today, and and you said that the economy isn't weak, but it's weaker. And so that's a sign. I mean, it it's it's a sign that the economy isn't weak at 2.8 percent growth. But if you start looking at some smooth the numbers and even the numbers within their report, consumer sentiment numbers came out today. They're weaker. The job claims, for weeks now, the job claims have been going up 6 out of the last 7 weeks.
We're we're 13 percent greater initial job claims than we had going into the the Covid recession. Housing. Both existing housing and new housing, the sales are going down. So we're seeing, you know, greater weakness there. And within that report on the Gdp is the inflation number. The inflation number is going down and inflation is a sign of of how much we're growing. And that's the the good number of, I mean, if there's a good
cholesterol bad cholesterol. This is the this is the good cholesterol draw that when it's going down, it means good things for the account. And remind me is that the Hdl or is that the Ldl, maybe some of our physicians listening can call in you know, I think the the fun part about, being in an economy that's still is stable as this 1 is is that you can look at all these data points and
go, yeah. But. And when you look at consumption and the consumer which we talk about as depending on which 1 of us you'll listen to 2 thirds or 70 percent of our economic output, that Gdp number that we were just talking about, you know, there's plenty of headlines recently that have pointed to cracks in the foundation, whether it's deli rates on credit cards and autos that have reached 12 year highs, the headline I saw this week, which when I went back
to find the headline, the headline had changed because of how poorly written it was, was that credit card deli had reached an all time high, and then buried in the article was a note that said that that particular data point had begun in 2012, which as we all know is after the great financial crisis in which credit card rates it spiked through the roof.
And when you look at related data that goes back to the 19 nineties every data point since the financial crisis has been so far below anything you saw pre great financial crisis. That we're still talking about high watermark marks that look nothing like what things look like before because generally speaking, consumers have been better behaved. Banks have been better behaved. And so The trend is always a
concern. If consumers have less to spend, if they are stressed by higher prices as so many are if the rates with which we are paying back loans start to take a little bit of a dip, What's that mean for the system more broadly, But it isn't at a place in which we've seen the kinds of concerns we saw in the past that might be a little more alarming. Well, I think that that sort of lends to this whole idea that we're all victims of our most recent perceptions. Right,
Kyle. And if we're looking at data that says, he, credit card debt is as high as it's ever been, but we're only been tracking it for 12 years. I mean, I love reminding clients that, you know for the last 50 years, inflation has averaged 3.8 percent. I mean, when I bought my house in the early 2 thousands I was thrilled to get a mortgage for a 30 year fixed in the single digits, you know, like 8 and a quarter percent. And and I have clients at tell me stories when they were buying houses in the
in the seventies and eighties. And they were thrilled to get something in the low double digits. So we're always victims of our most recent perceptions. And I think that we have been somewhat spoiled in the last decade with respect to where inflation has been. Because rates have been so low. And a lot of what's happening is this either unwinding or or returning to normal if you will, from the overall economic data points 30000 feet
up. Oh, even more so because of Covid, we entered an environment in which she couldn't spend money where you wanted spend it, then you started getting money from the government and from other sources. And so I think we may finally be entering a post Covid economy. It's weird to say because there's still hold overs all over the place when you look at post Covid meaning return to pre Covid normalcy? I don't know that it's a financial crisis normalcy. I don't know that it's
either. I think it's a return to whatever the new normal is going to be. And I think it's fair to say that the economy going forward doesn't have to look the way it looked. 5 years ago, it doesn't have to way the looked the way it did 15 years ago because clearly things have evolved, but I do think when you look at auto deli, credit card deli delinquent these. Rates of consumer spending maybe dipping a little in some areas. Personal savings taking a little bit of a
fall. It's just a reflection of the fact that some of those numbers look so rosy for so many years coming out of Covid that this isn't a period of time in which again, Joel as you you mentioned, I I wrote in my kind of pre show notes. This isn't a period in time in which the economy is weak. It's just weaker than what was a great economy. And and sometimes, Kyle, I mean, a lot of the times when I look at these numbers, I compare them to to February of 20 20.
Just before the Covid pandemic. And, so a couple of those numbers you just mentioned, credit card deli. It's 3.1 per 6 6 percent now. And just before Covid, it was 2.66 percent. So it's a little higher. But since 19 91, that's been 3.73 percent. So it's lower than, you know, the the long term average. The savings rate, we just found out today is was 3.4 percent in June, in February of 20 20. It was 7.7 percent. And 1 of the reasons that I look at February of 20 20 is, we had a
pretty good economy that. I mean, if if you think about it. I mean, we were talking about Gee, this looks pretty good. We should be expecting a recession soon because we're overdue, but things seem to be humming along. If it weren't for that 1 thing, who knows where we'd be. There's always that 1 thing. We we had to adapt. Yeah. We had to adapt. And so when I look at kind of where we are, and I look at how smoothly. We've been able to navigate the last few
years. Yeah. There were absolutely some bumps along the way. A big spike at inflation candle that you mentioned, the fact that when you see the personal spending number this week, Joel and it shows a core Pc, Oh, and a headline Pc that... Yeah, It's not back to the Fed's target, but it's a much better number. I think again, it speaks to we're finally returning to whatever normal is supposed
to be now. You can't blame the pandemic anymore for Well, inflation is high because there's all this excess cash. Yeah. There's there's some out there still, But a lot of it's made its way off the books and we should be starting to think about How are we gonna create the support we need for this economy? What's gonna be the foundation of what comes next? There also has to be the realization that there's always that 1 thing out there that we don't know about that that could disrupt us again. I
think that's fair. We talk about soft landing. We talk about is inflation gonna make it to 2? And then you go, okay, but are we gonna start another trade war? Are we gonna see another pandemic is that meter from space gonna get here. And so, yeah. It's... It's it's the unknown unknowns that ultimately lead to that concern and, you know, Kendall, maybe a big selling point for the need to look at opportunities to take gains right now. Yeah.
Absolutely. I think if you're somebody that has to take a required minimum distribution, that plans to do charitable gifting. Given where markets are again, Kyle pointed out at beginning of the show S and p closing the week a little over 15 percent Nasdaq, 16 percent. Dow almost 9 percent. And we're halfway through the year. I think it's a fantastic time to, you know, talk to your adviser, revisit your allocation in your portfolio. But maybe consider taking some gains off the table.
As we approach a point in the year where it's not to say that we feel there's gonna be a pullback but you say, okay, you look at the rally stocks have been on the last 7 to 8 months, and then you look at the likelihood of a slowdown as we approach, you know, the election where we know there will be more volatility due to the uncertainty. I just think that's a great a great
idea. Be. I would rather be a little bit early and take some gains and use it for things that you may need to, then, you know, try to do it later in the year when things could be, you know, jumping all over the place. Makes sense. Steve, secure Act of 20 20, created these wonderful rules that then took the Irs 4 years to come out with clear language on what they meant. We don't need to go 2 into depth on the 260 pages of Irs guidance that came out.
Over the last couple of weeks. But I do wanna touch on a question that comes up quite a bit with Ira owners with respect to what happens to their accounts for beneficiaries. The big change we'd all been waiting on is what's gonna be the requirement for withdrawals. And the Irs is finally clarified the guidance on what's supposed to happen with Ira beneficiaries. Yeah. I think it's a very important final here, we... That we have been waiting for.
And as a reminder, to our listeners, we're talking about inheriting monies from a non spouse, Ira owner. Obviously, if you're the spouse and you're the beneficiary, you take over that Ira with no tax consequences, whatsoever, you just assume it as though it's always been your own, you can roll it into your own Ira. But if you're non spouse beneficiary, a child, a sister, a brother, an nephew.
There are some certain rules that you have to follow in a nutshell, if the original owner had already begun taking their required minimum distributions, which right now is age 73 or above, then the inherit must continue to take a required minimum distribution each year, and they have 10 years to draw out the entire account. If you inherit an Ira from the original owner who had not yet attained the age of 73.
You do not have to take an annual required distribution, but you still have to draw the account within 10 years. Obviously, with whatever the situation, you should consult your, accounting consult to your financial planner, to make sure that the decision you make is right for your personal tax situation because the money that comes out of those Ira accounts is taxable and does get added
to your income. I think such a critical reminder how important it is to revisit those beneficiary designations to make sure that your intentions are clear to make sure that the people you name or the entities that you name are done in a way that says tax advantageous as possible that doesn't burden someone else with a tax liability that could better go to some other place. And so it's a conversation I have in every client meeting? Is this really what you want
Is this still what you want? Is there anything else you might wanna add here, and we have been given Rep reprieve for 20 24 from the Irs on those annual distributions. Same thing we saw in 23, 22, 21. But I do think coming 20 25, those annual distributions that Steve you were talking about are gonna back on the table. Seems unlikely now that the official guidance is out 4 years in, that we get another delay in that. And so if you are a an inherited Ira owner,
probably wanna start to plan. Okay. What's next year you're gonna look like Adam Yeah. And and just to piggyback on that, Kyle, if I'm understanding the way the passage of the law was written. If you inherited an Ira iran 20 21, and you're under the 10 year rules, but you've not yet taken the Rm d's because the Irs hadn't decided. It's not like you get the 10 year window beginning next year in 20 25. You still have to draw that countdown down.
Before 20 31, which would be 10 years from the time at which you originally inherited it. You just got a pass on having to take out the required minimum those first couple of years. Yeah. You got it. Plenty of news to come. I'm sure some more clarity on sec secure act. 2, probably in the works at this point, now that they've finalized the original secure act. 1 thing to clarify this may kinda be obvious here, but this only applies to inherited Ira after the start
of 20 20. If I'm not correct. So if you're somebody that's had 1 for years, this does not affect you to this is specifically for those that inherited, you know, non spouse beneficiary that inherited an Ira after 20 20. Yeah. Just throwing that in. Thank you for that clarification. Ken. I have plenty of beneficiaries, pre the implementation of Sec secure act. Thank that, can continue on with the plan as as they have.
With that, we enjoy doing the program for you we will talk to you again next week. Thank you for listening to money talk with Bob Land. If you have a financial question you want answered on next week's show, email it to money talk dot com. To keep informed throughout the week, visit our money talk page at land dot com.